Accounting is a necessary component for running a financially sound nonprofit organization. Without it, a not-for-profit can find themselves in financial trouble very quickly, or worse, in trouble with the IRS. It’s imperative that their accounting department or accounting firm stay organized and up-to-date with, not only the daily business, but with the changes to Generally Accepted Accounting Principles (GAAP) procedures.
Below are some tax tips to help you be better prepared and organized for the coming year:
Early preparation of your bookkeeping and taxes helps to keep your books organized and helps with staying current with any new changes to the tax code. Accurate and ethical bookkeeping will help to legitimize the legality of a nonprofit.
Successful accounting starts with keeping good records of all financial transactions. Having all the tax requirements, organizational policies, and company bylaws readily accessible can help financial managers stay on top of all financial procedures. Accounting software, specific to nonprofits, is a great tool to use not only for general bookkeeping, but can assist in the preparation of financial statements and warn of any missing information.
GAAP procedures, which are the standardized guidelines for financial accounting, can change from time to time and staying informed of any changes that might have taken place is a crucial part to successful accounting for nonprofits. To see some of the recent changes, please use this link to the FASB website. Some of the general differences between nonprofits and for-profits are: capitalizing and depreciating assets, contributions, use of cash accounting, and expense classifications.
Enlisting the help of a professional accounting firm can definitely help companies take some pressure off in having to know new changes that have been made to the tax code. In addition, good accounting firms can also help companies generate accurate financial statements, as well as making sure they’re prepared for potential audits. Although it can be expensive, the level of expertise you’ll receive from an accounting firm gives companies the peace-of-mind that things are being accounted properly.
At Verdeja, De Armas & Trujillo LLP, our team of Miami accountants is dedicated to providing personalized, financial guidance. We provide accurate and comprehensive financial statements as well as in-depth business analyses specific to your business or personal needs. Contact us today for a consultation!